Aareal Bank Group continues its successful performance in the second quarter of 2013

Wiesbaden (ots) -
- Second-quarter consolidated operating profit of EUR 45 million
- Net interest income rose to EUR 126 million, confirming the
turnaround seen in the first quarter
- New business in the Structured Property Financing segment grew
to EUR 2.4 billion - twice the amount reported for the same
quarter last year
- Aareal Bank affirms its consolidated operating profit forecast
for the full year

Aareal Bank managed another good performance during the second
quarter of the 2013 financial year, against the background of
continued market volatility and in a business environment that
continues to be challenging. With consolidated operating profit of
EUR 45 million, the Bank repeated the good performance achieved the
same quarter of 2012, falling only marginally short of the EUR 47
million reported in the previous quarter. Consolidated net income was
down slightly year-on-year, to EUR 21 million (Q2 2012: EUR 24
million), reflecting a higher full-year tax rate.

"At the mid-year point, we see no relief to the challenging
environment for the banking sector, given the prevailing economic
weakness in numerous markets, and increasingly demanding regulation.
The fact that we continued to perform well in these circumstances
once again demonstrates the viability of our business model with the
two strong pillars of Structured Property Financing and
Consulting/Services. We thus remain on track for achieving our
targets for the year", said Dr Wolf Schumacher, Chairman of Aareal
Bank's Management Board.

Aareal Bank posted another increase in net interest income for the
second quarter, and thus confirmed the turnaround in this item seen
during the first three months of 2013. Net interest income benefited
from good margins on new business underwritten during previous
periods, which offset the impact of the persistent low interest rate
levels on the deposit-taking business and on investing cash and cash
equivalents. At EUR 126 million, net interest income exceeded both
the net figures for the previous quarter (EUR 121 million) and the
same quarter of the previous year (EUR 122 million).

At EUR 28 million, Aareal Bank's consolidated allowance for credit
losses during the second quarter was only marginally higher than the
moderate figure for the previous year (EUR 25 million). Once again,
this testifies to the high quality of the Bank's credit portfolio.

New business in the Structured Property Financing segment totalled
EUR 2.4 billion in the second quarter - double the amount originated
in the same quarter of the previous year. "Once again, we have been
able to leverage the benefits of our three-continent strategy in our
commercial real estate financing business during the quarter under
review", Dr Schumacher explained. "We continue to consistently
exploit market opportunities available - without compromising our
strict standards in terms of returns and risk profile. In this
manner, we succeed in steadily expanding our market position."

Structured Property Financing segment: strong new business

Operating profit in the Structured Property Financing segment was
EUR 50 million in the second quarter of 2013, exceeding the previous
year's figure of EUR 44 million.

Segment net interest income in the period under review was EUR 124
million, after EUR 115 million in the comparable period of the
previous year. The positive effect of higher margins generated on new
business offset the impact of the persistent low interest rate levels
on investing cash and cash equivalents.

Allowance for credit losses was EUR 28 million in the second
quarter of 2013, compared with EUR 25 million in Q2 2012. Allowance
for credit losses during the first half of the year totalled EUR 45
million (H1 2012: EUR 37 million). It was therefore lower than the
pro-rata forecast range of EUR 110 million to EUR 150 million for the
financial year, but within the expected range.

The volume of new business originated in the second quarter
amounted to EUR 2.4 billion (Q2 2012: EUR 1.2 billion): a total of
EUR 4.4 billion has now been generated in the first half of 2013 (H1
2012: EUR 1.7 billion). In contrast to 2012, Aareal Bank consistently
exploited opportunities for high-margin new business from the very
beginning of 2013, in a more active transaction environment
characterised by higher liquidity. The share of newly-originated
loans was 55.0% in the second quarter and 57.0% for the first half of
2013.

Consulting/Services segment: a further increase in deposit volumes

Operating profit in the Consulting/Services segment totalled EUR
-5 million for the quarter under review (Q2 2012: EUR 1 million).

The business activities of the Aareon AG subsidiary developed
positively during the second quarter: operating profit amounted to
EUR 6 million during the second quarter of 2013 (Q2 2012: EUR 4
million). Aareon succeeded in winning new corporate clients for its
Wodis Sigma product line, which sets the benchmark for institutional
housing software, thanks in particular to its interface with
state-of-the-art cloud computing.

The results generated from the deposit-taking business were
burdened by persistently low interest rate levels. However, the
importance of this business goes way beyond the interest margin
generated from the deposits, which is under pressure in the current
market environment. This is because the deposits from the
institutional housing industry represent a strategically important
additional source of funding for Aareal Bank.

Against this background, deposit volumes from institutional
housing industry clients continued to develop favourably during the
second quarter, rising again, to average EUR 7.2 billion during the
quarter under review (Q1 2013: EUR 6.7 billion).

Successful funding activities - strong capitalisation

Aareal Bank continued to be successful in its refinancing
activities during the second quarter. The bank raised a total of EUR
1.2 billion in long-term funds, Mortgage Pfandbriefe accounted for
just under EUR 1 billion of new issuance, and unsecured funding for
EUR 200 million. Aareal Bank has therefore maintained its long-term
funding at a high level. Of the issues placed in the second quarter,
the £ 200 million, three-year Mortgage Pfandbrief issued in April and
the five-year, EUR 500 million Mortgage Pfandbrief issued in June are
particularly worth mentioning.

The Bank raised a total of EUR 2.6 billion in long-term funds on
the capital market during the first six months of 2013, with Mortgage
Pfandbriefe accounting for EUR 2.1 billion. Unsecured refinancing
amounted to EUR 500 million. In addition, EUR 45 million in
subordinated bonds were placed with investors.

Aareal Bank continues to be very solidly financed. The Tier 1
ratio rose to 17.5 per cent as at 30 June 2013, which is comfortable
on an international level. At the same time, the core Tier 1 ratio
increased to 12.0 per cent. Aareal Bank already complies today with
the capital and liquidity requirements under Basel III, which will be
gradually implemented between now and the end of 2018.

Notes to Group financial performance

Consolidated net interest income of EUR 126 million in the second
quarter was EUR 4 million higher than for the same period of the
previous year (EUR 122 million). The positive effect of higher
margins generated on new business offset the impact of the persistent
low interest rate levels on the deposit-taking business and on
investing cash and cash equivalents. Net interest income totalled EUR
247 million for the first six months of the financial year (H1 2012:
EUR 251 million).

Consolidated net commission income of EUR 39 million for the
quarter under review was only marginally lower than the figure of EUR
40 million for the same period of the previous year. Net commission
income totalled EUR 77 million for the first half of the year (H1
2012: EUR 80 million).

The aggregate of net trading income/expenses, net result on hedge
accounting and the result from non-trading assets was balanced (Q2
2012: EUR -5 million); the relevant aggregate figure for the first
six months of 2013 was EUR 2 million.

Consolidated administrative expenses totalled EUR 90 million for
the second quarter (Q2 2012: EUR 89 million) and EUR 182 million for
the first half of the year (H1 2012: EUR 180 million), thus remaining
on the favourable previous year's level, both for the second quarter
and the first half of the year.

On balance, consolidated operating profit for the second quarter
amounted to EUR 45 million (Q2 2012: EUR 45 million). Taking into
consideration income taxes of EUR 14 million and EUR 5 million in
income attributable to non-controlling interests, net income after
non-controlling interest income amounted to EUR 26 million. After
deduction of the net interest payable on the SoFFin silent
participation, and taking a forecast average tax rate of 31.2 per
cent for the full year 2013 into account, consolidated net income
stood at EUR 21 million in the second quarter (Q2 2012: EUR 24
million). The average tax rate for the full year 2012 was 30 per
cent.

Aareal Bank Group's consolidated operating profit for the first
six months of the financial year totalled EUR 92 million (H1 2012:
EUR 88 million). Taking into consideration income taxes of EUR 29
million and non-controlling interest income of EUR 10 million, net
income attributable to shareholders of Aareal Bank AG amounted to EUR
53 million. After deduction of net interest payable on the SoFFin
silent participation, consolidated income stood at EUR 43 million.

Outlook: Aareal Bank affirms its forecast consolidated operating
profit for the full year

Aareal Bank expects global economic growth to be subdued for the
remainder of the 2013 financial year, at previous year's levels.
Uncertainty with respect to the further development of the European
sovereign debt crisis continues to represent a serious burden,
especially in the euro zone, and will lead to significant regional
divergence in economic developments. Competition in commercial real
estate finance is set to intensify further, whilst stable development
is expected in the institutional housing industry.

Net interest income will benefit from the good margins achieved in
the lending business. However, the persistently low interest rate
levels will continue to represent a burden on deposit-taking business
and on investing cash and cash equivalents, so that net interest
income for 2013 is expected to be only slightly higher than the
previous year's figure.

Allowance for credit losses is expected to remain in a range
between EUR 110 million and EUR 150 million. As in the previous
years, the Bank cannot rule out additional allowance for unexpected
credit losses. The Management Board expects net commission income to
be stable, in a range between EUR 165 million and EUR 175 million.

Thanks to the measures implemented in 2012 to optimise the Bank's
structures and processes, administrative expenses are expected to
rise only slightly compared with 2012, to between EUR 360 million and
EUR 370 million. Aareal Bank currently envisages administrative
expenses at the upper end of this range.

Aareal Bank's current full-year target for new business in its
Structured Property Financing segment is EUR 6 billion to EUR 7
billion. From today's perspective, it is perfectly possible for the
Bank to generate between EUR 7 billion and EUR 8 billion of new
business volume for the full year 2013, against the background of a
more active transaction environment characterised by higher
liquidity, particularly in the United States. This will lead to
higher loan repayments, which on balance will be offset by exploiting
existing, attractive opportunities for new business.

In the Consulting/Services segment, the Management Board now
expects Aareon Group to generate operating profit at the level of the
previous year's level.

Aareal Bank continues to believe there is a good chance the Bank's
consolidated operating profit will match that of 2012; there is even
potential to reach the very good results achieved in 2011.

"Thanks to its solid position, Aareal Bank has successfully
mastered the challenges of the past years. And even though the
macro-economic environment remains tense, thanks to our viable
business model, our forward-looking business policy and outstanding
market position, we are in an excellent position to succeed even in
the 'new normal' for banks", Schumacher said.

In parallel to the results for the second quarter of 2013, Aareal
Bank has published a Sustainability Report for the first time, in
which the Bank's social and ecological performance are presented in a
comprehensive and systematic manner. The document is available on
http://www.aareal-bank.com/.

Note to editors: The full interim report for the second quarter of
2013 is available on
http://www.aareal-bank.com/en/investor-relations/financial-reports/.

Aareal Bank

Aareal Bank AG, whose shares are traded in Deutsche Börse's MDAX
segment and which celebrates its 90th anniversary this year, is a
leading international property specialist. The Bank concentrates its
business activities on the Structured Property Financing and the
Consulting/Services segments. The Structured Property Financing
segment encompasses all of Aareal Bank's property financing and
funding activities. In this segment, the Bank facilitates property
investment projects for its domestic and international clients,
within the framework of a three-continent strategy covering Europe,
North America and Asia. In the Consulting/Services segment, Aareal
Bank offers the institutional housing industry services and products
for managing residential property portfolios and processing payment
flows.

Contact:
Aareal Bank AG
Corporate Communications

Sven Korndörffer
phone: +49 611 348 2306
sven.korndoerffer@aareal-bank.com

Christian Feldbrügge
phone: +49 611 348 2280
christian.feldbruegge@aareal-bank.com

Investor Relations

Jürgen Junginger
phone: +49 611 348 2636
juergen.junginger@aareal-bank.com